Clancy’s Unite agreement: ‘endangers the Council’s budget’

John Clancy, Labour leader of Birmingham city council, yesterday survived a potentially fateful day as he faced his Cabinet and then the full Labour Group.

But an email exchange between the Interim Chief Executive and leader, seen by the Chamberlain Files, shows two people running Europe’s largest local authority at loggerheads, a leader frustrated by official advice and a chief executive repeating her ‘serious concerns’.

In an email sent by Stella Manzie to Cllr Clancy on the evening of the day (15 August) on which the leader concluded an “agreement in principle” with Unite’s Howard Beckett at Acas, the Interim Chief Executive:

Refuses to carry out the instruction in relation to a union representative being allowed to return to work

Sets out her serious concerns and those of fellow senior officers who have a duty to report on the council’s legal and financial obligations

Indicates at least two occasions prior to the agreement on which the leader met with senior officers who “raised our significant concerns regarding the budgetary implication and legal consequences that would arise, if concessions in relation to the Grade 3 posts were implemented”

Expressed frustration at not being granted a meeting with the leader, or having her call taken and senior management being excluded from meetings and any knowledge of the negotiations taking place.

The email was issued as a “formal note” and Ms Manzie referred several times to her role as Head of Paid Service, one of three statutory positions in a local authority which affords her legal duties.

The email was copied to Ian Ward, the Deputy Leader, and Lisa Trickett, the Cabinet member responsible for clean streets.

In the formal note, the Head of Paid Service sets out her long held view that the resolutions of the 27th June Cabinet, which outlined the waste management re-organisation plan, should progress including the issuing of redundancy notices. Ms Manzie states that the City Solicitor:

….provided you with two specific written advice notes setting out the legal implications and risks associated with the proposals in relation to retaining Grade 3s, dated 8th and 9th August respectively.

Ms Manzie points to three further occasions on which the leader received formal advice in relation to Equal Pay and financial impact. This included a detailed briefing, following an informal Cabinet meeting, from the Chief Financial Officer on the proposals Cllr Clancy was discussing with Unite.

Ms Manzie sent a further email to the leader setting out her continuing concerns after that informal Cabinet meeting on hearing that Cllr Clancy planned a further set of proposals for Unite including the withdrawal of plans to make Grade 3 posts redundant in the waste management service.

Ms Manzie makes clear:

Retention of the Grade 3 Leading Hands being on the face of it discriminatory;

Concern at official advice not being taken into account when discussing the reinstatement of Leading Hands with Unite’s Howard Beckett;

A case for ultra vires, possibly leading to a judicial review, if the leader did not take back to Cabinet the reinstatement of Leading Hands.

The Interim Chief Executive tells the leader in the formal note that “it is not acceptable for you to interfere in a management disciplinary matter.”

Ms Manzie makes crystal clear in her note that she and the other two postholders of statutory roles think that the leader should not progress the alternative position and asks him to:

discontinue discussions with Unite and withdraw from the draft statement immediately.

If this is published we believe it will result in a major financial risk to the authority, breach of the Equality Act as well as trade union and workforce unrest.

She concludes:

If you go ahead with this statement we feel the only course of action would be to bring a report to the Special Cabinet Meeting on 24th August and as part of this report the Monitoring Officer and Chief Financial Officer will need to set out their statutory responsibilities and the options they will need to consider.

In that report, authored by Ms Manzie and Jacqui Kennedy, Corporate Director – Place, it said that not implementing the plan including making the Grade 3 posts redundant would:

…still leave a significant gap which would lead to the need for very significant and urgent reductions in both revenue and capital commitments and would also lead to the statutory chief financial officer (the s151 officer) having to consider whether the Council was in a position to set a lawful and balanced budget.

Ms Manzie’s note includes reference to the impact on the other three trades unions and other staff. She also highlights the possibility of other industrial and legal action.

Her note says the other unions (Unison, GMB and Ucatt):

“…have already indicated…they would consider what action they would need to take to represent their female members if the proposal to Unite was enacted.”

Chamberlain Files understands that a further political cabinet was held to endorse the deal reached by the leader. We believe three members abstained when it came to a vote.

In his response on the same evening, Cllr Clancy defends his involvement in halting the employee investigation and allowing the union representative’s return to work.

He also replies to Ms Manzie’s “formal note” to say that discussing matters verbally is perhaps inappropriate. He states:

there has been an extremely serious failure of officers in relation to the conduct of this contingency in this dispute; and

repeats a warning to the chief executive and chief financial officer about the state of the budget and Future Operating Model.

Cllr Clancy’s position in recent days has been that official advice ahead of him reaching an agreement in principle with Unite had not been clear enough on the legal and financial implications.

In his response to Ms Manzie, he says that the Waste Management Cabinet Report of 27th June which set the re-organisation process in train was nearly withdrawn by the informal Cabinet. He states that the 27th June meeting was not properly informed and that there had been in fact no formal advice in the public and private reports.

The leader told the Interim Chief Executive that if he followed officer’s current advice it would place the City Council’s Assets and Revenues at significant risk and liability.

He goes on to say that the only way to proceed is through a negotiated settlement which banks the considerable gains which hugely dwarf the potential negatives relating to the grade 3s.

Cllr Clancy blames officers for a failure of contingency and unpragmatic and unrealistic advice that would be the cause of losing the dispute both practically and politically.

However, a well placed figure inside the Council House told Chamberlain Files that advice from officers had been clear and consistent throughout.

A second legal opinion, sought from outside the council by Cllr Clancy, conflicted with earlier advice only because the QC was not fully briefed on all relevant background. The second advice was we understand, in any case, only on the constitutional questions of whether Cllr Clancy could act in the employee investigation and their return to work and whether he had to take the agreement with Unite on retaining Grade 3s back through a formal Cabinet decision.

The council leader’s position in the last few days has been that the agreement with Unite was simply an agreement to get people around the negotiating table. He made the same point in the email response to Ms Manzie saying that nothing has yet been agreed. Cllr Clancy stated that when the decision is made by Cabinet, it will take into account the concerns and warnings of the three statutory officers.

The statement was issued by Acas on 16th August. The employee’s return to work was facilitated in an email from Cllr Clancy to the acting depot manager on 18th August in which he stated “all of the terms of the compromise will be implemented.”

Cllr Clancy went ‘dark’ after single tweets on 16th and 17th August. He did not issue any form of statement when the agreement began to fall apart around the Cabinet meeting of 24 August.

It took a week to back his Interim Chief Executive when Unite’s assistant general secretary publicly said she should resign.

Cllr Clancy said there was “no deal”; Unite wilfully misunderstood the agreement and that he “absolutely” backed his Chief Executive in a BBC interview last Friday.

Chamberlain Files understands there was no meeting at Acas yesterday as had been indicated by council insiders and no legal advice on the equal pay issue has yet been shared with unions.

The crisis at the Council House is the cause of absolute amazement in local government circles.

Among the aspects of this long and complex affair which is leaving old hands stunned are:

an elected leader taking personal control of industrial dispute negotiations;

an apparent trend of ignoring official advice;

intervening in the internal investigation of a staffing issue and then providing a direct instruction to an acting depot manager;

and twice commissioning legal opinion outside of the council, possibly paid through the political party.

As planned, Birmingham city council is starting the recruitment of a permanent chief executive.

In March, the council excitedly announced the appointment of Stella Manzie. Chamberlain Files was told her CV was, well, “stellar” and her appointment puts paid to the idea that BCC is such a basket case that no one decent would apply. We were also told by a Labour insider that Clancy kept calm when others were not calm, following the sensational departure of Mark Rogers.

It is clear that the relationship between Cllr Clancy and Ms Manzie has been badly damaged. The Cabinet report for the 24th August meeting made that seem likely, but the email seen by Chamberlain Files confirms what sources had been indicating to us recently.

In its letter to the Communities Secretary on 4th August, the Improvement Panel wrote:

The Leader of the Council is demonstrating strong political leadership and is working constructively with the Interim Chief Executive. The prospects for further improvement are good.

A style is being nurtured which emphasises open information-sharing, constructive working together, challenge and clarity about actions.

Meanwhile, the rubbish is piling up….

…the council’s budget is not under control

….The improvement panel has not gone away

And senior figures are becoming concerned at the possible impact on the city’s Commonwealth Games bid.